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Despite the common Euro Area (EA) requirements, we find notable differences in the quality of fiscal governance among the 19 member states. Moreover, characteristics of the delegation approach, which have been largely ignored in the EA fiscal governance framework, remain important in various member states. Using a two‐way fixed effects panel data model for the EA countries during 2006–2018, we find that the delegation approach can be effective to improve the fiscal position. On the other hand, the imposition of centrally mandated common rules‐based reforms has not taken into account the national political, social and institutional setting, and this may have also affected their effectiveness to achieve fiscal discipline. Our findings thus suggest a reconsideration of the one‐size‐fits‐all, rules‐based approach to fiscal governance in the EA. [ABSTRACT FROM AUTHOR]

In the early 2000s, several countries in the euro area (EA), mostly in the South, experienced an increase in current account deficits, while Northern countries saw an increase in current account surpluses. During the euro crisis, the South transitioned from a current account deficit to a surplus, while the North's surplus widened, thereby increasing the EA's overall current account surplus. To analyze the causes of the current account adjustment in the EA during the 2010s and to identify economic policies that reduce external imbalances, we employ a New Keynesian DSGE model with three regions (the North of the EA, the South of the EA, and the rest of the world). Our analysis reveals that the EA's expansionary monetary policy, fiscal consolidation, and lackluster productivity performance explain a significant portion of the current account adjustment. Furthermore, we find that the fiscal revaluation and expansion of the North would have limited effects on external imbalances. [ABSTRACT FROM AUTHOR]

The main inflation factors were analyzed of relatively high inflation in Lithuania after the COVID-19 pandemic in the context of European Union and euro area. The system dynamics model was developed mathematically describing the interrelations between inflation and the set of macroeconomic variables. The hypothetical reduced inflation rates were calculated modeling the different scenarios of macroeconomic changes under the inflationary environment. [ABSTRACT FROM AUTHOR]

This study investigates the institutional factors influencing foreign direct investment within the Eurozone of the European Union (EU) and explores their correlation with economic integration. Attracting foreign direct capital investments is closely related to countries' efforts to make their institutional structures more competitive. Because economic integrations can contribute to economic growth by allowing these investments to increase. For his reason, the study focused on the course of foreign direct capital investments in the Eurozone in the 2002-2022 period and the institutional determinants of these investments were analyzed using the panel data method. The empirical analysis revealed that variables such as foreign direct investment, government effectiveness, political stability, and accountability did not experience any significant shocks. In the short term, a direct causal relationship between foreign direct capital investments and corruption has been found. Nevertheless, in the long term, it has been established that variables such as control of corruption, government effectiveness, political stability, rule of law, accountability, and regulatory quality collectively exhibit a causal relationship with foreign direct capital investments. These findings emphasize the importance of institutional structure for increasing foreign direct capital investments. Enhancements in governmental efforts to combat corruption, enhance governance effectiveness, promote political stability, uphold the rule of law, enhance accountability, and improve regulatory quality can significantly contribute to fostering foreign direct investment. In conclusion, this study provides valuable insights into the determinants of foreign direct investment in the euro area and offers guidance for future policy actions. [ABSTRACT FROM AUTHOR]

This article offers a monetary perspective on capital flows and the Eurozone's north-south divide. It argues that finance-centric narratives in comparative political economy rightly emphasize financial instability in the periphery, but that the role of capital flows therein requires clarification. The article draws on post-Keynesian monetary theory, coherent accounting, and balance-of-payments data to make three points. First, the focus on the financial account as a driver of current accounts should be abandoned in favor of an analysis of gross capital flows. Gross flows need not stem from excess savings in core countries and can be independent from trade flows. Second, explanations of financial instability in the periphery should go beyond bank flows and consider speculative portfolio flows into bond markets and foreign direct investment into real estate. Third, rising spreads in the periphery during the Eurozone crisis and the outbreak of the pandemic were not triggered by balance-of-payments problems but by a reversal of speculative bond flows. Comparative political economy should thus dedicate more attention to institutions that render peripheral countries susceptible to speculative flows into asset markets. [ABSTRACT FROM AUTHOR]

In this paper we investigate whether the banks which fall under direct supervision by the European Central Bank (ECB) are more likely to be considered more stable and trustworthy by the depositors due to the stricter supervisory activities performed since the implementation of the Single Supervisory Mechanism (SSM). Under the SSM, significant banks switched from national supervisors to ECB, whereas the remaining banks remained under national supervisory authorities (NSAs). Using the difference-in-difference (DID) method, we have found evidence of increased depositors' trust in significant banks after the SSM implementation. Additionally, in anticipation of the SSM launch and the comprehensive assessment, we have found evidence of increased depositors' trust in the banks which were expected to be supervised by the ECB. [ABSTRACT FROM AUTHOR]

Summary: This paper introduces a novel panel approach to structural vector autoregressive analysis. For identification, we impose independence of structural innovations at the pooled level. We demonstrate robustness of the method under cross‐sectional correlation and heterogeneity through simulation experiments. In an empirical application on monetary policy transmission in the Euro area, we find that bond spreads rise significantly after an unexpected monetary tightening. Furthermore, the central bank responds to offset effects of adverse financial shocks. Additionally, we document sizable heterogeneity in country‐specific output responses. [ABSTRACT FROM AUTHOR]

Copyright of Boletín Económico de ICE is the property of S.G.E.E.I.P.C., Secretaria de Estado de Comercio, Ministerio de Industria, Comercio y Turismo and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This study investigates the impact of central bank digital currencies (CBDCs) on monetary policy flexibility, the effective lower bound (ELB), and negative interest rate policies (NIRPs), specifically in the case of the digital euro (DE). Through a combination of theoretical modeling and empirical analysis, including two extensive surveys among EU participants, we explore whether CBDCs can change the ELB and affect consumer preferences in favor of the digital euro over physical cash. Our findings indicate that the introduction of the DE could potentially move the ELB from its current value of around −1.30% by approximately 0.25%. If agents had the possibility to move their deposits into both cash and DE, they would convert approximately 52% of the converted amount into cash and the rest into CBDCs. However, over a 10 year period, the situation would shift in favor of the DE, with a share of 63%. Both findings show that NIRPs will be more limited in the case of the introduction of CBDCs (DE). These facts must be considered both when deciding whether to introduce a CBDC (DE) and after its eventual introduction in the case of NIRP application. [ABSTRACT FROM AUTHOR]

Two years after the COVID-19 pandemic, the Greek economy seems to have overcome the turmoil of the pandemic crisis as well as that of the following energy crisis. Nevertheless, it would be wrong to assume that the Greek economy has returned to a sound state, since this was not really the case even before the pandemic. Furthermore, the anemic growth rates of the pre-pandemic period were followed by an equally weak average growth rate (including the impact of the pandemic), as some of the significant fundamental weaknesses of the Greek economy, which had accumulated over time and constituted the real origin of the Greek crisis, have not been properly addressed yet. This paper attempts a complete mapping of the current state of the Greek economy, offering an insight into the external and internal determinants affecting it. [ABSTRACT FROM AUTHOR]

The goal of this paper is to test the mean reversion process of the inflation rate in the Eurozone during the COVID‐19 pandemic crisis. The study uses weekly data on consumer prices (measured through the Harmonized Consumer Price Index), spanning the period from 2020 to the mid of 2022. The findings document that euro area inflation follows a mean non‐reverting process, with most of its components following a similar pattern. Moreover, sub‐period analysis illustrates that the vaccination process against the pandemic gives a transitory character to euro area inflation, which, however, is dominated by the lockdown and the Omicron mutation periods. Finally, comparative analysis illustrated the differences of inflation persistence during the Global Financial Crisis of 2007–2009. [ABSTRACT FROM AUTHOR]

The aim of this study is to delve into the intricate the mechanism through which alterations in currency exchange rates give rise to shifts in inflation rates, while taking into careful consideration the country's economic cycle. In order to accomplish this objective, we used a dataset that spanned from 1 January 1999 to 1 July 2023, focusing our analytical lens on three specific geographic areas, namely the Eurozone, the United Kingdom, and Canada. In our pursuit of understanding this complex relationship, we employed the Markov Switching Vector Autoregressive model. Our research outcomes can be succinctly encapsulated as follows: in the initial stages, particularly during phases characterized by robust economic growth, the transmission of exchange rate effects onto inflation levels appeared to exhibit a partial impact across all geographic areas under examination. However, during periods marked by economic downturns, both the United Kingdom and Canada displayed a distinctly more comprehensive transmission of these effects. Moreover, the prevailing projections for the forthcoming time horizon, across all the countries encompassed by our study, strongly indicate the onset of an expansionary phase that is projected to extend over a span of 25 months. Lastly, concerning the implications of unexpected disturbances or shocks, it is noteworthy that the response of exchange rates to inflation induced shocks was neither immediate nor as pronounced as the corresponding reaction of inflation to sudden shifts in exchange rates. [ABSTRACT FROM AUTHOR]

This study employs a time-varying parameter vector autoregressive (TVP-VAR) model to investigate inflation propagation and spillovers among twelve major consumer prices components across eleven Euro area countries from 1999 to 2023. We uncover empirical regularities in the transmission channels of inflation, noting Transport and Clothing and Footwear as primary shock transmitters, whereas Communication, Alcohol and Tobacco consistently absorb shocks. These insights, consistent across various contexts and countries, contribute to understanding inflation persistence and households' inflation experiences in the Euro area and may contribute to more credible and effective policy design. [ABSTRACT FROM AUTHOR]

The importance of assessing and estimating the impact of the COVID-19 pandemic on financial markets and economic activity has attracted the interest of researchers and practitioners in recent years. The proposed study aims to explore the pandemic's impact on the economic activity of six Euro area economies. A class of dynamic panel data models and their corresponding Seemingly Unrelated Regression (SUR) models are developed and applied to model the economic activity of six Eurozone countries. This class of models allows for common and country-specific covariates to affect the real growth, as well as for cross-sectional dependence in the error processes. Estimation and inference for this class of panel models are based on both Bayesian and classical techniques. Our findings reveal that significant heterogeneity exists among the different economies with respect to the explanatory/predictive factors. The impact of the COVID-19 pandemic varied across the Euro area economies under study. Nonetheless, the outbreak of the COVID-19 pandemic profoundly affected real economic activity across all regions and countries. As an exogenous shock of such magnitude, it caused a sharp increase in overall uncertainty that spread quickly across all sectors of the global economy. [ABSTRACT FROM AUTHOR]

This paper presents a methodology, called ROBOUT, to identify outliers conditional on a high-dimensional noisy information set. In particular, ROBOUT is able to identify observations with outlying conditional mean or variance when the dataset contains multivariate outliers in or besides the predictors, multi-collinearity, and a large variable dimension compared to the sample size. ROBOUT entails a pre-processing step, a preliminary robust imputation procedure that prevents anomalous instances from corrupting predictor recovery, a selection stage of the statistically relevant predictors (through cross-validated LASSO-penalized Huber loss regression), the estimation of a robust regression model based on the selected predictors (via MM regression), and a criterion to identify conditional outliers. We conduct a comprehensive simulation study in which the proposed algorithm is tested under a wide range of perturbation scenarios. The combination formed by LASSO-penalized Huber loss and MM regression turns out to be the best in terms of conditional outlier detection under the above described perturbed conditions, also compared to existing integrated methodologies like Sparse Least Trimmed Squares and Robust Least Angle Regression. Furthermore, the proposed methodology is applied to a granular supervisory banking dataset collected by the European Central Bank, in order to model the total assets of euro area banks. [ABSTRACT FROM AUTHOR]

In this contribution, I discuss the divergence of German and French public finances over the course of the last two decades. Major gaps in public deficit/debt levels and debt service costs have opened even under the presence of a common fiscal framework at the EU level. To explain these differences, I focus on three elements: the (non-)perception of budgetary and socio-economic crisis, differences in demographic conditions, and contrasting approaches towards the role of rules and expertise in fiscal policymaking. The contribution illustrates these points by providing two concise case studies on key developments in fiscal policymaking and institutions since the 1990s. I conclude with a brief reflection on German and French fiscal policymaking in the years to come. [ABSTRACT FROM AUTHOR]

In January 2015, Greece witnessed a political earthquake with the election of the populist anti-austerity/EU bailout coalition of the left-wing party SYRIZA and the far-right party ANEL. It is argued that during January–July 2015, the SYRIZA–ANEL coalition engaged in a protracted process of renegotiation of Greece’s bailout terms that were agreed between previous Greek governments and the so-called Troika (European Commission, European Central Bank, and International Monetary Fund) adopting a behaviour ruled by “unpolitics.” First, the SYRIZA–ANEL government immediately rejected formal and informal rules of EU decision-making. Second, the SYRIZA–ANEL government rejected traditional means of compromise, such as package deals and side payments. Third, when Greece’s creditors presented their last-minute bailout offer in June 2015 to avoid Greece leaving the eurozone (Grexit), the SYRIZA–ANEL government rejected the suggested solution and tried to exploit the ensuing deadlock by calling a rashly organised referendum asking Greeks to vote against the suggested deal. This period of “unpolitics” ended almost immediately after the referendum when, in a sudden and unexpected volte-face, Tsipras interpreted the referendum result as a call for compromise with the Troika and accepted the previously intolerable bailout deal.

This paper explores the relationship between working capital management (WCM) strategies and business performance during the COVID-19 crisis. Data from 1,067 non-financial European firms from 33 countries distributed across 6 economic sectors in the period from 2015 to 2021, feed Ordinary Least Squares model (OLS), robust and quantile pooled regression. COVID-19 crisis seems to have negatively influenced only median-low-range performance firms in Europe, showing that crisis coming from productive capacity hibernation do not impact nor impose tough slow recovery, transversal to all firms, as occurred on other financial crises. As for WCM, only median-top-range performance firms had significant statistical evidence for negative impact, that become positive for median-range performance firms during COVID-19. For Eurozone firms, there was an additional positive influence of the WCM on performance during COVID-19. Median-range performance firms seems to benefit from conservative WCM strategies mitigating firms’ performance negative effect raised by COVID-19 crisis. Relation between COVID-19 and WCM seems to be sensitive to different levels of firms’ performance and to different business’ economic sector. Contrary to knowledge on WCM, performance and financial crises in Europe, for COVID-19 alike crises, performance benefits from higher cash conversion cycles and thus encourage conservative WCM strategies. Liquidity should not be pushed by adopting aggressive WCM strategies.

The article "Eurozone: We expect a quicker pace of rate cuts by the ECB" discusses the economic outlook for the Eurozone, forecasting a GDP growth of 0.8% in 2024 and 1.2% in 2025. Inflation is expected to average 2.3% in 2024 and drop to 1.5% in 2025, below the European Central Bank's target. The European Central Bank is anticipated to implement a series of rate cuts over the coming quarters, with the deposit rate projected to reach 1.75% by the end of Q3 2025. [Extracted from the article]

We analyze the nonlinear effects of government spending in the Euro area, by using the local projection method and by testing whether the impact of the shock depends crucially on the depth of the recession, on some structural characteristics of the Eurozone (EZ) economies, and on the monetary policy stance. We provide four insights. First, expenditure multipliers in the Euro area are not significantly higher in recessions than in expansions. However they are always above unity. Second, state dependency emerges as soon as deep recession is distinguished from ordinary downturns. Third, structural characteristics, such as the presence of automatic stabilizers, the exchange rate regime, the degree of labor market flexibility, and initial conditions, such as the debt/gross domestic product ratio, do influence the size of expenditure multipliers in the EZ. Fourth, multipliers are much higher when the policy interest rate is at the zero lower bound. [ABSTRACT FROM AUTHOR]

Central Banks in major industrialized economies have struggled to keep inflation within their target ranges since the global financial crisis. The periods of missing inflation and deflation experienced in the post-crisis era have led to doubts about the traditional Fisher effect as a crucial component of the policy reaction function. We explore the NeoFisherian theory, which suggests an alternative causal relationship between the policy rate and inflation. We focus on the USA, UK, and EU and apply wavelet coherence analysis to examine the time–frequency lead–lag comovements on data spanning from January 2007 to March 2023. Our findings indicate increasing NeoFisherian dynamics, notably post-2013 taper tantrum, implying that Central Banks in industrialized economies have misunderstood monetary policy dynamics. [ABSTRACT FROM AUTHOR]

Three decades into the independence restoration of Latvia and the dissolution of the Soviet Union, the country has integrated well into the Western community. It is a member of the EU and NATO, the Schengen area, the eurozone, and, since recently, OECD. Turning Westwards, Latvia attempted to abolish the post-Soviet and enter the European spatiality above all to secure the country's physical existence. But not less importantly, to redefine the collective understanding of the Self. The principal argument I make in this article is that countries with the Soviet past may seek their contemporary identity in self-attribution to the desired political regions. That is, embed their new identities in discursive regionalism. The example of Latvia showcases the argument. However, ambiguous discourses of the Latvian regional belonging persist in the national imaginary. The range varies from the post-Soviet and its milder alternative – Eastern European – to the Northern European and Baltic. The mixed regional affiliations result from inconsistencies in the region-building approach exercised by the political elite of Latvia. They stem from the country's ontological security search in NATO and the EU accession aftermath and amid the war in Ukraine within the newly acquired regional identities contrasted with the vestiges of the Soviet past. [ABSTRACT FROM AUTHOR]

The aim of this paper is to examine the impact of a country's entry into the monetary union on its economic variables growth rate of real GDP as well as on GDP per capita growth for the period from 2010 to 2020. The clustering method and the ANFIS method were used in the data analysis. A total of two cluster analyses were performed. The first cluster includes countries that joined the EU in 2004 and became EZ members by 2010. The second cluster refers to those countries that joined the EU in 2004 but are not yet members of the EZ. For the first individual cluster analysis two models were analysed and for the second individual cluster three models were analysed using the ANFIS method. As expected, the results showed that GDP growth is connected with trade, inflation and gross investments in fixed capital in the observed countries, while GDP per capita is connected with unemployment, interest rates and public debt. With regard to GDP growth, the difference between countries that are in the eurozone and those that are not is not significant, which is in line with other studies. [ABSTRACT FROM AUTHOR]

The article examines three legal opinions recently issued by the ECB on national laws concerning cash acceptance and payments in the euro area. It analyses how the ECB ensures the Eurosystem Cash Strategy and the legal tender status of cash are respected and applied across the Member States in a uniform manner. It also discusses the implications of the opinions for consumers, merchants and financial services firms in the context of the EU's Single Currency Package and other developments. [ABSTRACT FROM AUTHOR]

Purpose: The paper investigates if the process that led to the birth of the Euro Area had a significant impact in homogenizing the capital structure decisions of European firms since the first introduction of the common currency. Design/methodology/approach: A large sample of firms was constructed, and a Tobit-censored regression model was utilized to investigate the determinants of firms' observed capital structures. The Black–Scholes–Merton model was used to infer market values of assets, as well as the volatility of those values, from the observed market values of equity and the corresponding volatility. The existing differences in national tax rules were considered for estimating firm-specific marginal tax rates. Findings: It was found that, despite the currency union and the institutional harmonization process, certain factors still play a different role. In particular, the impact of profitability is consistent with the pecking order view in some countries, and with the trade-off theory in others. Assets risk, measured as the annualized volatility of the market enterprise value, is the best predictor of observed leverage ratios. The sector of activity is significant in determining leverage decisions even when assets' risk is taken into account. Despite the monetary union and the increased financial and institutional integration in the Euro Area, the country of origin still plays a significant role in capital structure decisions, suggesting that other country-level factors may affect firms' financing behaviour. Practical implications: The paper indicates that, despite the long harmonization process of institutions, regulations and public budget required to join the Euro, firms' financing decisions are still affected by country-specific factors once the common currency is introduced. Therefore, new entrant countries in the Euro area should not expect their companies to immediately conform with those located in other countries within the common currency area. Originality/value: This article investigated the impact of the currency change from national currencies to the Euro on the determinants of capital structure choices. It was shown that, despite the long harmonization process that led to the birth of the Euro Area, national factors still affect firms' financing decisions. This provides guidance for policymakers in countries that are planning to join the Euro about the impact this will have on firms' financing decisions in the entrant country. [ABSTRACT FROM AUTHOR]

This study focuses on the examination of the side effects of the European cohesion policy (ECP), in particular, the direct and indirect effects of the European structural and investment (ESI) funds on business cycle co-movement in the Euro area (EA) countries. The results of analysis performed using the simultaneous equations framework in the 2000–2019 period reveal that increasing ESI payments within the cohesion policy have overall contributed to more synchronized EA business cycles. Even though the ESI payments do not seem to directly support synchronization, probably because of their procyclical nature, we find that the unintended benefits of the ESI payments with respect to the synchronization lie in their indirect positive effects, which outweigh the negative direct effect. The total positive effect of the ECP emerges because increasing investment from the ESI funds promotes the EA business cycle synchronization via trade, bilateral FDI, and income similarity. Meanwhile, similar evidence has not been confirmed for the specialization channel. [ABSTRACT FROM AUTHOR]

This study deals with the evolution of fuels' prices over time in the EU. The central research inquiry revolves around whether there exists any correlation among the trajectories followed by national prices in the gasoline and diesel markets. The EU, and more specifically the Euro-Area, by its construction, is treated as an OCA (Optimum Currency Area). In an OCA, certain conditions are met to ensure the smooth functioning of a common currency. The fuel price synchronization is essential because it contributes to the effective implementation of policies and promotes stability across the entire macroeconomy. The study covers the period of 2017–2022. For each type of fuel and year, we construct an individual network where network nodes represent the EU member states while the edges connecting these nodes represent strong temporal fuel price correlations among the member states. The properties of the resulting networks are analyzed within a Complex Network framework. Our goal is twofold: first, to detect any potential convergence or divergence in the trajectories of the prices, and second, to investigate the impact of tax and duty implementation on the co-movements of the prices. The empirical findings show that diesel markets have a more pronounced pattern of price co-movements compared to the gasoline markets. Moreover, the application of fuel taxation policies seems to adversely affect the co-movements of prices. [ABSTRACT FROM AUTHOR]

The process of financialisation has been extensively studied and several stylised facts identified. Short-termism is one of these. This article analyses the role that changes in accounting rules have played in increasing short-termism in company management. Our study considers the adoption of the International Financial Reporting Standards in the European Union (EU), showing that the new accounting standards have altered companies' sensitivity to investment opportunities, leading to underinvestment in the real economy. In doing so, our article highlights the public-policy profile of accounting standards setting and possible tensions with EU societal objectives. To the best of our knowledge, this is the first study empirically analysing the role of accounting rules in the financialisation of economy. [ABSTRACT FROM AUTHOR]

Copyright of Transfer: European Review of Labour & Research is the property of Sage Publications, Ltd. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

We study the effect of euro adoption on various property crimes for a group of Eurozone countries with data from 1993 to 2019. We hypothesize euro adoption has a positive association with home burglaries and robberies as the euro is relatively more valuable and mobile than pre-euro currencies. We offer a simple theoretical model to motivate the hypothesis. A dynamic panel data model is estimated by generalized method of moments (GMM) to account for endogeneity, measurement error, heteroskedasticity, and serial correlation. Our results indicate some evidence of a positive relationship between euro adoption and property crimes. Other countries considering euro adoption may find the results of our study informative. [ABSTRACT FROM AUTHOR]

Purpose: This paper aims to examine potential diversification benefits between Eurozone (i.e. EURO STOXX 50) and key Asia markets: HSI (Hong Kong), KOSPI (South Korea), NIKKEI 225 (Japan) and TSEC (Taiwan). The sample covers the period from 04-01-2008 to 19-10-2023 in daily frequency. Design/methodology/approach: The empirical investigation is based on the wavelet coherence analysis, which is a localized correlation coefficient in the time and frequency domain. Findings: The results provide evidence that long-term diversification benefits exist between EURO STOXX and NIKKEI, EURO STOXX and KOSPI (after 2015) and there are signs for the pair and EURO STOXX-TSEC (after 2014). During the short term, there are signs of diversification benefits during the sample period. However, during the medium term, the diversification benefits seem to diminish. Originality/value: These results have crucial implications for investors regarding the benefits of international portfolio diversification. [ABSTRACT FROM AUTHOR]

The article examines financial hardship (FH) that appears as one of the essential socio-economic-financial categories reflecting a financial burden on society and therefore having a significant impact on the social and economic development of the country. The purpose of this article is to propose and approve a methodology for the complex quantitative assessment of financial difficulty, which allows comparing countries one another. The novelty of the conducted research is manifested by the formed financial hardship adequately exposing a system of indicators and suggesting the transformation of incomparable indicators into the comparable ones. The paper proposes a methodology for the integrated assessment of financial hardship based on multi-criteria methods, which contributes to solving the problems of the social sustainability and economic development of the countries employing different research methods. The proposed methodology provides a possibility of moving to a higher level of research comparing the countries as a whole, in line to the current status of FH. The actual benefits of the carried out research arise from the opportunity to envisage targeted measures for increasing social sustainability subject to the specific situation of the financial hardship of the countries thus removing the burdens of further economic development. [ABSTRACT FROM AUTHOR]

This article contributes to the carbon pricing debate by providing new evidence on the aggregate macroeconomic effect of the European Union Emissions Trading Scheme (EU ETS) in the Eurozone. To this end, a novel macroeconomic performance index is created to capture the overall economic performance of the Eurozone countries. The index is a weighted aggregation of key macroeconomic variables—GDP growth rate, inflation rate, employment rate, exchange rate, and long-term inflation rate—for the 19 member countries of the group. The effect of the EU ETS on this macroeconomic performance index is then empirically examined while controlling for the effects of physical capital accumulation, human capital accumulation and regulatory quality. A panel framework covering the period 2005–2022 is set up to achieve this objective and the relationship is examined using panel method of moments quantile regression with fixed effects, as well as fixed and random effects regressions of Driscoll and Kraay. A number of important revelations are made. Firstly, the behavior of the macroeconomic performance index constructed clearly reflects the economic reality of the Eurozone, with downward spikes visible in periods corresponding with the economic crisis of 2007–2009, the Eurozone debt crisis of 2010/2011, the aftermath of the financial crisis of 2016, and periods around the outbreak of the Coronavirus (COVID-19) pandemic. Hence, a case is made for the use of the macroeconomic performance index as a superior aggregate measure of the overall economic performance in empirical research. Secondly, a statistically significant negative effect of the EU ETS on aggregate macroeconomic performance in the Eurozone is confirmed. This shows that there are significant economic costs associated with the use of carbon pricing as a means of lowering pollution. Thirdly, the findings further show that the negative impact gradually decreases (in absolute values) from lower to higher quantiles. Overall, higher carbon prices cause greater economic disruption when macroeconomic performance is relatively poor but have less damaging effect when aggregate economic performance is relatively strong. Policy recommendations based on the study findings are also provided. [ABSTRACT FROM AUTHOR]

We compare the economic and environmental performances of India and China over the past decade against the Euro Area, Japan, and the USA. India has emerged as the world’s fastest growing large economy, but closer scrutiny suggests this impressive economic performance derives largely from structural factors such as labor force growth and the Balassa-Samuelson effect. Indeed, notwithstanding its superior level of economic development relative to India, China still posts stronger economic gains from investment and total factor productivity growth. While the two economies have grown markedly faster than the three developed economies against which we compare them, both Indian and Chinese growth has come with huge increases in greenhouse gas emissions. Our findings underscore the importance of Chinese and Indian participation in efforts to avoid the more dire impacts of climate change. [ABSTRACT FROM AUTHOR]

Avoiding moral hazard is a recurrent argument of those seeking to limit the development of European financial support mechanisms. Germany has been the traditional leader of this coalition of actors in the European Union (EU). However, in reaction to the Covid-19 pandemic, Germany supported an EU response which included grants and massive debt issuance. What was previously presented as unacceptable – because of moral hazard – became appropriate. This contribution seeks to explain why the German government ceased to emphasise the moral hazard problem in EU economic governance. We argue that the answer is not because of a challenge to the relevance of moral hazard per se, or because the Germans lost interest in the moral hazard problem, but rather because German policymakers were discursively constrained by one of the dominant meanings of moral hazard they had previously imposed – which lost its relevance in the context of a symmetric exogenous shock. [ABSTRACT FROM AUTHOR]

Several authors, especially those who share a Classical–Keynesian point of view, argue that the interest rate determines the rate of profit in the long run. Considering the eleven founding economies of the euro area, I find that, adjusted for the rate of growth of gross national income, there is a positive long-term relationship between the real interest rate and the net rate of profit. The results are confirmed even when I estimate a model with nominal interest rates, inflation, and a yield curve. These results imply that the European Central Bank (ECB), when deciding monetary policy, is not neutral in determining income distribution. [ABSTRACT FROM AUTHOR]

For a party that often accuses foreign media of conniving with the domestic opposition, Giorgia Meloni's Brothers of Italy is oddly hungry for good reviews in the U.S. press. Even incidental positive remarks about the Italian prime minister are routinely broadcast across the party's Instagram and twitter accounts, while more critical notes get lost in translation. When Meloni visited President Joe Biden last July, the Washington Posttermed her a "rising star of the far right"; the pro-government Secolo d'Italiareworded it to "international rising star." Her colleagues were particularly enthused in February when CNN's Fareed Zakaria issued a four-minute homage to "Meloni's moment" as a European political heavyweight. Despite grim forecasts upon her election, Zakaria claimed, Meloni had achieved a "remarkable turnaround," proving herself as a stable Western ally, backing Ukraine, and even filling a leadership vacuum in the European Union left open since Angela Merkel's resignation as German chancellor in 2021. Brothers of Italy trumpeted his message far and wide. [ABSTRACT FROM AUTHOR]

Copyright of Acta Scientiarum Polonorum. Oeconomia is the property of Wydawnictwo SGGW and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Boletín Económico de ICE is the property of S.G.E.E.I.P.C., Secretaria de Estado de Comercio, Ministerio de Industria, Comercio y Turismo and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper examines the impact of the cost of labor on macroeconomic imbalances within the eurozone. For this purpose, we construct a three-country Stock-Flow Consistent (SFC) macroeconomic model in an open economy including the eurozone and the rest of the world. We show that internal devaluation is not effective as an economic policy for getting the eurozone economies to converge. Cutting labor costs cannot kick-start economic activity through a rebound in exports of those countries that do so. Instead, it involves the risk of locking their economies concerned into low-wage production activities. The fall in unemployment it entails is the consequence, then, of a downturn in labor productivity. In contradistinction, we defend the idea that the introduction of a new wage rule making monetary wages dependent on productivity gains and on the target for inflation set by the European Central Bank, together with a budgetary stimulation policy, would be conducive to initiating convergence among European economies. In particular, it would produce a convergence in living conditions by improving labor productivity but it would also bring production structures closer together. [ABSTRACT FROM AUTHOR]

This paper provides the first evidence on the role of national culture in the integration of Eurozone life insurance markets. It analyzes seven markets over a sixteen-year sample period that includes the financial crisis. We focus on three cultural values, which are individualism, trust, and hierarchy. The results indicate that collectivism culture increases cost and revenue performance and integration of Eurozone life insurance markets. Trust contributes to this integration, particularly in financial crisis, and egalitarian culture facilitates it in non-crisis time. We find that these relations prevail for unaffiliated single companies, but they weaken or do not even hold for groups of insurers. Our findings are robust with tests designed to alleviate endogeneity concerns. [ABSTRACT FROM AUTHOR]